Wayfair to layoff 1,750 workers


© Reuters. Wayfair (W) to layoff 1,750 workers – shares rise

By Sam Boughedda 

Wayfair (NYSE:) shares have rallied around 7% premarket after the company said it will lay off approximately 1,750 employees, representing 10% of its global workforce.

It includes approximately 1,200 or 18% of the retailer’s corporate employees, with the changes reflecting efforts by Wayfair to “eliminate management layers and reorganize to be more agile.”

Wayfair said that inclusive of the August 2022 restructuring, the labor portion of the plan represents approximately $750 million in annualized cost savings, “with the major steps necessary to realize these savings now complete.”

“Although difficult, these are important decisions to get back to our 20-year roots as a focused, lean company premised on high ambitions and great execution,” stated Niraj Shah, CEO, co-founder, and co-chairman of Wayfair. “The changes announced today strengthen our future without reducing our total addressable market, our strategic objectives, or our ability to deliver them over time.”

Shah added that, like its technology peers, the company scaled its spending too quickly over the last few years.

Wayfair added that its business momentum continues to strengthen and in December, year-over-year gross revenue trends experienced a further improvement compared to November.

On Thursday, KeyBanc Capital Markets analysts initiated coverage of Wayfair with a Sector Weight rating.

The analysts wrote in a research note that given the current macroeconomic environment, investors are increasingly focused on businesses that generate positive EBITDA and FCF.

“With Wayfair estimated to generate -$424M in adjusted EBITDA in 2022, and with many years of negative adjusted EBITDA prior to the pandemic, we believe it is critical for W to show progress on profitability,” said the analysts. “This is a top priority for management, although it is clearly a pivot from the growth focus of the past 10-20 years. Expense reduction initiatives targeting $500M+ are underway, with hundreds of millions more possible.”

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